Rising Diesel & Fertilizer Prices Push The Cost Of Agriculture By 25-40%

The rising prices of diesel and fertilizers pose a challenge to the government in the coming months. Out of the 5 states that have Vidhan Sabha elections in the Rabi season, 4 states, Madhya Pradesh, Rajasthan, Telangana and Chhattisgarh are primarily agrarian states.

Arvind ShuklaArvind Shukla   6 Nov 2018 11:53 AM GMT

Rising Diesel & Fertilizer Prices Push The Cost Of Agriculture By 25-40%

Lucknow. In October 2017 the average price for diesel was Rs. 57 a litre. In October 2018 the price is Rs. 75 rupees a litre. While the rate of diesel had rising by 17 or 18 rupees the price of DAP has increased by Rs.380, potash Rs. 350-400 per sack and pesticides have risen by 30 to 40 percent. Due to this the rise in cost of planting an acre of wheat has risen by Rs.3000.

While rice has been harvested in many states, it is still being harvested in UP and Bihar. As they prepare to plant their Rabi crops of wheat and potato farmers are worried by the rising costs.

Last year the tractor cost Rs 400 per hour for ploughing the fields, this year it is Rs.500. Photo Credit: Suyash

Diesel, fertilizers, seeds and pesticides have all become more expensive. In Lucknow's, Sonwa village, Ambuj Dixit, 32, has 4 acres of land that he intends to sow with wheat. He says, "With the rise in diesel prices everything has become expensive. Last year the tractor cost Rs 400 per hour for ploughing the fields, this year it is Rs.500. The cost of irrigation too has gone up from Rs 100 per hour to Rs 150 per hour. The price of DAP has increased by Rs 400. This means that it will cost approximately Rs 3000 more per acre to grow wheat." (Figures are based on interviews with farmers and shopkeepers)

Increasing Cost

The Indian Government has increased the Minimum Selling Price (MSP) for 21 crops in the Rabi season. The price for wheat in 2018-19 has increased from Rs. 1735 in 2017-18 to Rs. 1840 per quintal. This is an increase of 6 percent. The price of diesel has increased by approximately 28 percent and fertilizers like DAP, Potash, MOP and Urea etc, which are essential for wheat production have increased by 25 to 40 percent.

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These figures are confirmed by VPS Malik, Director of the Gomti Agro Input PVT Ltd, a large dealer in seeds and pesticides. "After adding GST the price of pesticides has increased by approximately 20-35 percent." While the rate of Urea hasn't changed much seeds in the market now cost between Rs 26 – 35 as opposed to Rs 22-25 per kg last year.

The rate of seeds in Government stores however hasn't seen any significant rise and are protected by subsidies.

The sowing of wheat in states like Punjab, Haryana, Uttar Pradesh and Bihar usually begins from November 15.

In the coming days the cost of fertilizers may rise even more as the falling rupee makes it more expensive to import raw materials required for their production from the international market. The prices of urea free fertilizers like DAP (Di-ammonia Phosphate), Potash and NPK (Nitrogen, Phosphorous, Potassium) are likely to rise in the coming Rabi season. While the government does give subsidies to protect the prices of fertilizers the subsidy on non-urea-based fertilizers has not been increased for the year 2018-19. Quoting the rating agency ICAR, the Business Standard had reported an increase of 12 – 13 percent in the price of DAP, and 25 – 30 percent in Potash for the Kharif season this past year.

Challenge To The Government

The rising prices of diesel and fertilizers pose a challenge to the government in the coming months. Out of the 5 states that have Vidhan Sabha elections in the Rabi season, 4 states, Madhya Pradesh, Rajasthan, Telengana and Chhattisgarh are primarily agrarian states.

Another challenge is that the government has been unable to give the MSP it fixed to farmers for the Kharif crop and farmers are suffering because of this. Working with her husband in their fields in Lucknow's, Gazipur village, Sunita tell us, "we get Rs. 1400 for one quintal of wheat. That is how much one bag of DAP now costs. The farmers will all die if this goes on like this. The government and other people should remember that they will have to go to bed hungry if farmers give up farming their fields."

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Ambuj Dixit of Sonwa village says that 60 percent of the 2400 people in his village are farmers. "the government should give farmers a subsidy on diesel on an acreage basis." he says.

According to Dr. Girish Jha, Agro economist at IARI, "The input cost of farming has gone up from last year. Because petroleum prices have gone up, diesel, DAP and Mobil which are linked to it have also become more expensive. Secondly MSP is only profitable if all farmers can sell at it. The input cost should be set based on market rates.

The farmers in Haryana and Punjab may be happy with a certain MSP but not those in Bihar and UP. To increase earnings for farmers it is important to cut input costs. So, if irrigation facilities are adequate, increased productivity can lower input costs." Girish is talking about states like Punjab and Haryana where most of the land is irrigated. In Gujarat and Madhya Pradesh there is a separate electricity line for irrigation.

According to the 2011 census, nationally, 40% of land on an average is un irrigated, whereas 55% of land in Uttar Pradesh is un irrigated. Only 31% of land in UP has a guaranteed supply of irrigation where 2 crops a year are certain. In February this year the PUSA institute organised an international conference to double the income of farmers by 2022.

The Prime Minister Narendra Modi stressed on 4 things from which he prioritised reducing the input cost and getting an adequate price. But the rising petroleum costs are putting a spanner in the PM's priorities. Lucknow based seed and pesticide supplier Nitin Gupta says that "even a 10% increase in input costs can impact farmers considerably."

How To Bring The Cost Down?

"A farmers highest expenditure is on irrigation. Drip irrigation will have to be taken up widely, the government offers up to 90% subsidy on this. Farmer's costs also rise because they use DAP and Urea blindly. Even today most farmers don't get soil testing done. Farmers should be increasing the use of local fertilizers like compost and vermi compost instead of expensive fertilizers.

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This will bring down input costs and benefit their health." says Dr. Daya Srivastava, Crop Security Scientist, at the Krishi Vigyan Kendra, Katiya, Sitapur. From December more than 40 pesticides are being banned in India, this had led to increased prices of pesticides and weed killers.

Agricultural Specialist Ramandeep Mann on returning from Karnal where the stubble of the Kharif crop is a burning issue says that the difference between what the government says and does is the problem, "The Rs 100 – 150 increase in MSP has come to nothing. In Punjab the government doesn't want the farmers to burn the stubble.

It is offering a high subsidy on Super Straw Management System machines but I went to several districts where there were no machines available. There is a big difference in government files and ground reality. Not burning the stubble increases the farmers cost by Rs 4000 to 5000 per hectare, so they prefer to pay the penalty and burn it anyway." A high level Committee has been formed under the leadership of the Prime Minister to deal with the problem of stubble burning in Punjab, Haryana UP and Delhi, which has a budget of Rs 1151.80 crore.

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